Papers - All

Mark A. Lane, Michael J. Seiler, Vicky L Seiler

Cited by*: 0 Downloads*: 0

This study is the first to examine the widely debated merits of staging a home for sale. We find that both homeowners and real estate agents believe staging conditions (furnishings and wall color) will significantly impact homeowners' willingness to pay for a property. Our results show that homeowners rationally do not significantly differ in their valuations based on staging conditions. However, staging conditions do influence the process, as we find a neutral wall color and good furnishings do significantly influence a buyers' perceived liability and overall opinion of the home. While these are a necessary condition for purchase, staging is not enough to result in a higher selling price.

Ted Gayer, John Horowitz, John A List

Cited by*: 0 Downloads*: 0

Clear Skies is an economist's approach to pollution reduction. We heartily endorse its core approach, while recommending surgery for a few minor blemishes.

Michael J. Seiler

Cited by*: 2 Downloads*: 0

This study identifies a severe gap between the financial backlash borrowers believe awaits them after strategic mortgage default and the reality that lenders rarely pursue deficiency judgments. This coupled with the social norm finding that borrowers widely view strategic default as immoral, leads us to recommend lenders and policymakers seeking to stem the tide of defaults to pursue a policy of informational opacity. We make several recommendations for how to carry out such a policy as well as what might need to change in society before the alternative policy of informational transparency becomes ideal.

John A List

Cited by*: 12 Downloads*: 0

n/a

Michael J. Seiler, Eric Walden

Cited by*: 0 Downloads*: 0

In this study, we use functional magnetic resonance imaging (fMRI) to understand how homeowners process non-financial information when considering strategic mortgage default. We find that borrowers initially attempt to inhibit their knee-jerk reaction to retaliate against a lender who has engaged in egregious lending practices when compared to a financially conservative lender. Moreover, when defaults are rare, borrowers are less likely to default because violating the social norm results in feelings of disgust. Finally, when a lender refuses a loan modification, the borrower is found to seek retribution. Interestingly, granting even a modest loan modification removes the desire of homeowners to seek retribution towards their lender no matter what their impression of the lender may be. The results carry a number of policy implications.

Michael J. Seiler

Cited by*: 4 Downloads*: 0

Inequity Aversion has long been applied in a game theoretic setting to explain that individuals are willing to sacrifice personal wealth in order to financially penalize players they perceive to be acting selfishly or unfairly. I apply inequity aversion to strategic mortgage default decisions and find that individual homeowners (as well as a second sample of professional mortgage lenders) have a differential stated willingness to walk away from their mortgage based on the perceived characteristics of their lender. Importantly, these significant differences can be removed even with extremely modest loan modifications. Finally, I document that regular homeowners and even professional lenders do a poor job differentiating between the owner of their loan and the servicer of their loan. This is particularly troubling given the extreme misconception of their bank's true character. As a result, much of their willingness to penalize is misplaced resulting in an unnecessary number of strategic mortgage defaults.

John A List

Cited by*: 5 Downloads*: 0

Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in "double-auction" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets- the sports card and collector pin markets-I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.

Antoni Bosch-Domenech, Rosemarie Nagel, Juan V Sanchez-Andres

Cited by*: 0 Downloads*: 0

Alzheimer patients in the early stage of the disease were asked to participate in the Dictator game, a game in which each subject has to decide how to allocate a certain amount of money between himself and another person. The game allows the experimenter to view the influence of social norms and preferences on the decision-making process. When the data from the experiment are compared with the results of an identical experiment involving two control groups with similar ages and social background, one group with Mild Cognitive Impairment patients, the other with healthy subjects, it appears that the results from the three groups are statistically undistinguishable. This is an indication that Stage I AD patients are as capable of making decisions involving social norms and preferences as any person of their age, and that whatever brain structures are affected by the disease, they do not include, at this stage, the neural basis of cooperation-enhancing social interactions.

Craig E Landry, Andreas Lange, John A List, Michael K Price, Nicholas G Rupp

Cited by*: 4 Downloads*: 0

Several recent laboratory experiments have shown that the use of explicit incentives--such as conditional rewards and punishment--entail considerable "hidden" costs. The costs are hidden in the sense that they escape our attention if our reasoning is based on the assumption that people are exclusively self-interested. This study represents a first attempt to explore whether, and to what extent, such considerations affect equilibrium outcomes in the field. Using data gathered from nearly 3000 households, we find little support for the negative consequences of control in naturally-occurring labor markets. In fact, even though we find evidence that workers are reciprocal, we find that worker effort is maximized when we use conditional--not unconditional--rewards to incent workers.